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Homes in their hands
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Nationwide Increase Mortgage Rates
Tuesday, 14 October 2008
Writes Hazel Cottrell hazel.cottrell@consumerchoices.co.uk
Last week’s 0.5% interest rate cut will not mean cheaper mortgages for everyone, with Nationwide hiking its rates on tracker mortgages and scrapping deals for first time buyers.
Nationwide (www.nationwide.co.uk) Britain’s biggest building society, has pulled all its mortgages, sold through brokers, for borrowers with a 10% deposit. Now only one three year deal is available up to 90% of the property’s value, and this only available through its branches. It has replaced the rest of its 90% loan-to-value deals with products that require a 15% deposit.
Nationwide has also increased the margins on its tracker deals, which are linked to the Bank of England Base rate, by up to 0.61 percentage points. A two year tracker deal for a homeowner looking to remortgage, previously available at 0.93 points above the base rate, is now available at 1.54 points above the base rate.
Matthew Carter, divisional director of mortgages at Nationwide, said that the moves were designed to “maintain control of the volume of business the society is attracting, and continue lending in a prudent and responsible way.”
Following the base rate cut last week Halifax (www.halifax.co.uk), Bank of Scotland (www.bankofscotland.co.uk), Woolwich, owned by Barclays (www.barclays.co.uk), The Royal Bank of Scotland (www.rbs.co.uk) and Cheltenham and Gloucester, owned by Lloyds TSB (www.lloydstsb.co.uk) have all cut their standard variable rates by the full 0.5 percentage points.
Other lenders including Nationwide, Abbey (www.abbey.com), and HSBC (www.hsbc.co.uk) are yet to announce whether or not they will pass on the 0.5% cut to its borrowers on their variable rate mortgage deals.
Northern Rock is the first major lender to confirm it will not be passing on the full 0.5% cut to its variable rate deal customers. It is reducing its standard variable rate (SVR) by only 0.15 percentage points to 7.34% from 1st November.
David Hollingworth, of L&C Mortgages, told the Times: “Northern Rock borrowers with very little or no equity effectively have nowhere else to go. Failing to pass on the full base rate cut will hit those borrowers that need the cut the most.”
The base rate cut last week did immediately benefit the 4.2 million homeowners who are on tracker mortgages. A typical homeowner with a £150,000 mortgage will save £63 a month on their repayments.
Chris Eagle, commercial manager at CreditChoices.co.uk says: “First time buyers are already struggling to find 10% deposits to satisfy potential lenders. With these lenders continuing to raise rates and demanding further increased deposits, mortgages within the reach of first time buyers are becoming scarcer. However, there are still some reasonable deals out there. Whether you are looking to secure your first mortgage or to benefit from remortgaging, you can use our Mortgage Comparison Service to find the best deal for you.”
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